Gregory Sullo and Brian Zimmerman v. Felix Michael Kubosh A/K/A Kubosh Bail Bonding, Paul Kubosh A/K/A Kubosh Law Office ( 2020 )

Opinion issued December 31, 2020
In The
Court of Appeals
For The
First District of Texas
————————————
NO. 01-18-00418-CV
———————————
GREGORY SULLO AND BRIAN ZIMMERMAN, Appellants
V.
FELIX MICHAEL KUBOSH A/K/A KUBOSH BAIL BONDING, PAUL
KUBOSH A/K/A KUBOSH LAW OFFICE, Appellees/Cross-Appellants
V.
WILLIAM CARTER, SANDRA ARNAEZ, JASON ROCHA, EDUWIGIS
SUASTE, SARA PADILLA, GRANT HIGHTOWER, WALTER
LETHERMON, JONATHAN GLENN, KREGG GIBSON, GERRY
CHANEY, JUAN ALVAREZ, JAIME GAYTKO, EDWARD CARNEY,
PAUL COLLINS, CIRINO HERNANDEZ, PRESTON BAWA, MONICA
WIRZ, EDRICH MACK, MERCY HAYES, JOSE ALAMO, RUBY
SEPULVEDA, SEAN SIMON, KRISTAL OROZCO, JANET RAMIREZ-
HERRERA, BALTAZAR MARTINEZ, SHELTON HARRIS, RANDALL
STEVISON, BRIAN ARELLANO, FELIPE CAVAZOS, LARRY RICHARD,
JEFFERY RHODES, HECTOR CUEVAS, CYNTHIA SANCHEZ, GINA
TORRES, ROBERTO LARES, LEON TOUSANT, LINDA MARTIN,
GREGORY BARNES, ELIZABETH GUERRERO, ALEICIA ROBERTS,
ANA REYES, DERRICK RIVERS, DEVIN BARRIOS, CHRISTINA
VILLANUEVA, PRISCILLA MUNOZ, JEANETTE MAYA, ERIC AYALA,
FARID ABI-SAAB, JOE PECINA, ANDREW RAMIREZ, MAURICIO
MENDEZ-BARRERA, MIGUEL DIAZ, PATRICK WASHINGTON, EARL
CHILTON, DOROTHY SCOTT, THOMAS PITTARD, JUANITA MARIN,
JULIO TORRES, RAYMOND FORD, VIRGINIA KNAUFF, CHERRY
AYO-VAUGHN, JOSE CAMPA, ONYEKACHI EKEZIE, RIGGO
DOMINGUEZ, MARQUIS WILLIAMS, RICARDO TREVINO, JESUS
CASTRO, EDUARDO VALDEZ, BOLIVAR SIERRA, EVA CASTILLO,
GUSTAVO GARCIA, SETTEA MENEDO, MICHAEL YOUNGBLOOD,
AND BRANDON NASH, Cross-Appellees
On Appeal from the 333rd District Court
Harris County, Texas
Trial Court Case No. 2013-50819
OPINION ON REHEARING
Appellants, Gregory Sullo and Brian Zimmerman, filed motions for rehearing
of our November 19, 2019 opinion. We deny appellants’ motions for rehearing, but
we withdraw our November 19, 2019 opinion and judgment and issue this opinion
and judgment in their stead. Our disposition remains unchanged.
This interlocutory appeal arises out of three consolidated lawsuits filed by
William Carter and seventy-three other plaintiffs (collectively, “the Carter parties”)
against Felix Michael Kubosh, Kubosh Bail Bonding, Paul Kubosh, and Kubosh
Law Office (collectively, “the Kuboshes”) for violation of a civil statute prohibiting
barratry. During the course of this litigation, the Kuboshes filed suit against Brian
Zimmerman, the Carter parties’ counsel of record, and Gregory Sullo, an attorney at
Sullo & Sullo, LLP, a law firm that had initially represented the Carter parties before
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engaging Zimmerman to file suit on their behalf. Sullo, Zimmerman, and the
Kuboshes all filed motions to dismiss the claims against them under the Texas
Citizens Participation Act (“TCPA” or “the Act”). The trial court denied all three
motions to dismiss.
Sullo, Zimmerman, and the Kuboshes all appealed. Each of the appellants and
cross-appellants argue that the trial court erred in denying their respective motions
to dismiss under the TCPA.
We affirm the trial court’s denial of all three TCPA motions to dismiss.
BACKGROUND
Andrew Sullo and his brother, Gregory Sullo, are attorneys and partners in the
Houston law firm of Sullo & Sullo, LLP. Andrew Sullo and Sullo & Sullo are third-
party defendants in the underlying proceedings, but they were not parties to the
TCPA motions discussed in this opinion and are not parties to this interlocutory
appeal. Attorneys at Sullo & Sullo practice in multiple areas of the law, including,
relevant to this case, defense and bonding services for traffic tickets and warrants
arising out of unpaid tickets. Their competitors include Kubosh Bail Bonding, which
is owned and operated by Felix Michael Kubosh, and Kubosh Law Office, which is
owned and operated by Paul Kubosh.
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A. Civil and Criminal Statutes and Disciplinary Rule Prohibiting Barratry
In 2011, the Texas Legislature passed Texas Government Code section
82.0651, entitled “Civil Liability for Prohibited Barratry.” This statute provides, in
relevant part:
(c) A person who was solicited by conduct violating Section
38.12(a) or (b), Penal Code, or Rule 7.03 of the Texas
Disciplinary Rules of Professional Conduct of the State Bar of
Texas, regarding barratry by attorneys or other persons, but who
did not enter into a contract as a result of that conduct, may file
a civil action against any person who committed barratry.
(d) A person who prevails in an action under Subsection (c) shall
recover from each person who engaged in barratry:
(1) a penalty in the amount of $10,000;
(2) actual damages caused by the prohibited conduct; and
(3) reasonable and necessary attorney’s fees.
(e) This section shall be liberally construed and applied to promote
its underlying purposes, which are to protect those in need of
legal services against unethical, unlawful solicitation and to
provide efficient and economical procedures to secure that
protection.
TEX. GOV’T CODE ANN. § 82.0651(c)–(e). This statute became effective on
September 1, 2011.
Penal Code section 38.12(a), entitled “Barratry and Solicitation of
Professional Employment,” provides that a person commits the criminal offense of
barratry if, with intent to obtain an economic benefit, the person:
(1) knowingly institutes a suit or claim that the person has not been
authorized to pursue;
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(2) solicits employment, either in person or by telephone, for himself
or for another;
(3) pays, gives, or advances or offers to pay, give, or advance to a
prospective client money or anything of value to obtain
employment as a professional from the prospective client;
(4) pays or gives or offers to pay or give a person money or anything
of value to solicit employment;
(5) pays or gives or offers to pay or give a family member of a
prospective client money or anything of value to solicit
employment; or
(6) accepts or agrees to accept money or anything of value to solicit
employment.
TEX. PENAL CODE ANN. § 38.12(a).
Section 38.12(b) provides that a person commits an offense if the person:
(1) knowingly finances the commission of an offense under
Subsection (a);
(2) invests funds the person knows or believes are intended to further
the commission of an offense under Subsection (a); or
(3) is a professional who knowingly accepts employment within the
scope of the person’s license, registration, or certification that
results from the solicitation of employment in violation of
Subsection (a).
Id. § 38.12(b).
Penal Code section 38.12 dovetails with Rule 7.03(a) and (f) of the Texas
Disciplinary Rules of Professional Conduct, which provides:
(a) A lawyer shall not by in-person contact, or by regulated
telephone or other electronic contact as defined in paragraph (f)
seek professional employment concerning a matter arising out of
a particular occurrence or event, or series of occurrences or
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events, from a prospective client or nonclient who has not sought
the lawyer’s advice regarding employment or with whom the
lawyer has no family or past or present attorney-client
relationship when a significant motive for the lawyer’s doing so
is the lawyer’s pecuniary gain. . . .
....
(f) As used in paragraph (a), “regulated telephone or other electronic
contact” means any electronic communication initiated by a
lawyer or by any person acting on behalf of a lawyer or law firm
that will result in the person contacted communicating in a live,
interactive manner with any other person by telephone or other
electronic means. For purposes of this Rule a website for a
lawyer or law firm is not considered a communication initiated
by or on behalf of that lawyer or firm.
TEX. DISCIPLINARY RULES PROF’L CONDUCT R. 7.03(a), (f), reprinted in TEX. GOV’T
CODE ANN., tit. 2, subtit. G, app. A (Tex. State Bar R. art. X, § 9).
B. Sullo’s “Price Match Program” and Initial Contact with the Carter
Parties
Almost immediately after the civil barratry statute, Government Code section
82.0651, became effective in September 2011, Andrew Sullo informed individuals
who inquired about bonds and representation for traffic tickets that were in “warrant
status” that his office had a “price match program.” Under this program, the
individual would call a competing bail bond company to receive a quote for the price
of the bond, and Sullo promised that his office would beat the quoted price by ten
dollars. Prior to the individual’s making the phone call, Sullo and the individual
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would review a “Disclosure & Agreement” form that described the price match
program. This form included a paragraph that stated:
II. Potential Legal Action — Attorney [Sullo] has reason to
suspect that upon Client [the respective individual] making Client’s
Price Match phone call to the bond company, the Bond Company will
transfer the call to a law firm without Client’s request or consent.
Attorney believes this action may give rise to a civil cause of action
against the bond company or law firm under a new barratry statute or
other law which, if successful, may result in money damages for Client.
In some instances, the bond company may also quote on behalf of an
attorney or law firm which may also give rise to a cause of action. Client
agrees to make this phone call knowing that these potentially illegal or
unethical actions may occur by the bond company or law firm. After
Client’s phone call, Attorney will discuss with Client the potential for
a legal cause of action by Client against the bond company. If Client
wishes to pursue a legal cause of action against the bond company and
Attorney believes a legal cause of action does indeed exist, Client will
be required to sign a separate contact agreement with Attorney. By
signing this Disclosure & Agreement, Client is not committed or
obligated to hire Attorney to pursue a legal cause of action against the
bond company.
(Emphasis added). The form also asked each individual for their permission to
record their phone call to the competing bond company, stating, “This recording may
be used, with Client’s consent, to help prove the illegal and unethical action by the
bond company or law firm.”
The program targeted the Kuboshes’ law firm and bail bond company. Prior
to the program participants’ making their phone calls, Sullo provided each individual
with a printed instruction sheet that set out certain questions for the participant to
ask. These questions included whether the quoted price for the bond included
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attorney representation and whether the individual should report to the office of
Kubosh Bail Bonding or Kubosh Law Office—which were located adjacent to each
other—to complete paperwork.
All seventy-four Carter parties called Kubosh Bail Bonding, and, in each case,
an employee of Kubosh Bail Bonding answered the phone. When the Carter parties
informed the employee that they had unpaid traffic tickets that were in warrant
status, the employee transferred the call to Kubosh Law Office. A Kubosh Law
Office employee then asked each of the Carter parties questions about their tickets,
quoted them a price, and stated that the price included both the bond and legal
representation because the office did not offer bonding services without legal
representation. After the phone call ended, each of the Carter parties signed an
attorney-client agreement with Sullo, in which the individual “retain[ed] Attorney to
prosecute all claims against all necessary defendants arising from possible acts of
barratry committed in attempting to obtain legal services.” The representation
contract included a provision allowing Sullo to associate with other attorneys and
law firms to prosecute the case. Eventually, each of the cases was referred to Brian
Zimmerman of Zimmerman Axelrad and Joe Fisher of Provost Umphrey. Each of
the Carter parties ultimately signed a new attorney-client contract agreeing to the
referral and to the division of any recovered attorney’s fees among counsel.
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Most of the Carter parties made their phone calls to Kubosh Bail Bonding in
September and October 2011, although several of the Carter parties made calls in
2012 and 2013. Seventy-two of the Carter parties met Sullo in his Houston office
and made their phone calls there. Two of the Carter parties, Michael Youngblood
and Brandon Nash, had traffic tickets from the City of Houston, but they were
Beaumont residents, and both of these individuals met with Sullo in a conference
room at the Beaumont office of Provost Umphrey to make their calls.
C. The Civil Barratry Lawsuits
Michael Youngblood, with Brian Zimmerman as his counsel of record, filed
suit against the Kuboshes in Jefferson County, where he resided, on April 5, 2013.
He asserted that the Kuboshes had violated the civil barratry statute, Government
Code section 82.0651, and he alleged:
On or about September 19, 2012, Plaintiff contacted Kubosh Bail which
is owned and operated by Michael Kubosh. Plaintiff had three traffic
tickets on which he needed to post bonds because they were in “warrant
status.” Plaintiff contacted Kubosh Bail after receiving a Kubosh Bail
Bonding business card containing Mike Kubosh’s name, cell phone
number, and office number. Based on this contact information, Plaintiff
dialed the telephone number advertised on Mike Kubosh’s bail bond
business card. A certified transcript of the telephone conversation is
attached hereto as Exhibit “A.”
A representative for Kubosh Bonding Company answered the
telephone and identified the business as “Kubosh Bonding Company.”
After Plaintiff informed the representative of Kubosh Bail that he
needed a quote for bonds for traffic tickets, the representative placed
Plaintiff’s call on hold. Shortly thereafter, a different representative
answered the telephone, and then identified the business as “Kubosh
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Law.” See Exhibit “A.” Upon information and belief, Kubosh Law is
owned and operated by Paul Kubosh.
The Kubosh Law representative then quoted Plaintiff a price for a bond
for his traffic cases. The representative from Kubosh Law further
indicated that the price quoted for a bond included the posting of the
bond as well as the fee for an attorney to represent Plaintiff on his
traffic cases. Plaintiff never sought an attorney to represent him in
connection with obtaining his bond. Id.
He attached to his pleading a transcript of a conversation he had had with Michael
Kubosh, which included a notation that an “unidentified male” whispered an
instruction to Youngblood that he answer “no” to a particular question. This
“unidentified male” was later identified as Andrew Sullo.
William Carter, with Zimmerman as his counsel of record, filed suit in Harris
County against the Kuboshes for violation of the civil barratry statute on August 28,
2013. Over the next two months, Carter amended his petition several times to add a
total of seventy-one additional plaintiffs. The factual allegations in Carter’s petitions
were substantively identical to the allegations in Youngblood’s petition. The
Kuboshes answered Carter’s lawsuit on September 30, 2013, and they asserted
counterclaims, including claims for injunctive and declaratory relief relating to their
contention that the civil barratry statute violated their constitutional rights.
Brandon Nash, also with Zimmerman as counsel of record, filed a separate
suit in Jefferson County against the Kuboshes for violation of the civil barratry
10
statute on October 1, 2014. The factual allegations in his petition were substantively
identical to the allegations in Youngblood’s and Carter’s petitions.
D. The Kuboshes’ Counterclaims and Third-Party Claims
During the course of discovery on the Carter parties’ claims and the
Kuboshes’ counterclaims in this litigation, the Kuboshes learned that Andrew Sullo
had been involved with the Carter parties and their calls to the Kuboshes. On October
21, 2014, the Kuboshes amended their counterpetition against the Carter parties and
filed a third-party action against Andrew Sullo and his law firm, Sullo & Sullo, LLP.
The Kuboshes’ amended counterpetition contained the following allegations:
[Andrew] Sullo orchestrated each and every Carter Plaintiff’s and
another 64 barratrously-solicited strangers’ calls from Sullo’s own
[Sullo & Sullo] office (as well as other locations) to Kubosh Bonding
using phone numbers Sullo provided each Carter Plaintiff, along with
pretextual “price match” scripts, and previously-prepared form
affidavit instructions listing Kubosh Law as the intended ultimate
recipient of each Sullo-instructed call.
Sullo masterminded an attorney-crafted scheme to perpetrate a Fraud
on the Court, defined in BLACK’S LAW DICTIONARY and case law as “a
lawyer’s or party’s misconduct so serious that it undermines or is
intended to undermine the integrity of the proceeding” such as “bribery
of a juror and introduction of fabricated evidence.” Sullo surreptitiously
recorded every Carter Plaintiff’s call. Sullo then filed this suit to
retaliate against the Kubosh Brothers . . . .
This Court should dismiss the Carter Plaintiffs’ claims because not
even one “was solicited” by Kubosh Law, to use the passive-tense
operative verb in the Civil Barratry Statute. Sullo and [Sullo & Sullo]
have conspired with, and have been aided and abetted by their counsel,
Zimmerman, and his firm, Zimmerman Axelrad, to barratrously solicit,
file, and maintain the Carter Plaintiffs, Youngblood and Nash’s
frivolous lawsuits to reap undeserved economic benefits where their
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perceived pecuniary gain was a significant motivation for the filing and
maintenance of these lawsuits.
The Kuboshes’ amended counterpetition sought injunctive and declaratory relief,
arguing that the civil barratry statute was unconstitutional as applied to them. The
Kuboshes also asserted claims for common-law fraud and civil conspiracy against
the Carter parties, Andrew Sullo, and Sullo & Sullo, alleging that the Carter parties
made their calls to the Kuboshes under false pretenses because they never intended
to purchase bonding services from the Kuboshes.
Additionally, the Kuboshes brought claims in this suit against the Carter
parties, Andrew Sullo, and Sullo & Sullo for violation of the federal Racketeer
Influenced and Corrupt Organizations Act (“RICO”), alleging that the Carter parties,
Andrew Sullo, and Sullo & Sullo formed a criminal enterprise under RICO “to serve
as a flexible vehicle for Third-Party Defendants Sullo and [Sullo & Sullo’s] filing of
a vengeful, Fraud on the Court lawsuits to destroy or degrade Sullo’s competitors
Michael Kubosh and Paul Kubosh by embroiling them in legally meritless but
expensive and time-consuming ‘civil barratry’ litigation.” The Kuboshes alleged
violations of RICO as well as conspiracy to violate RICO.
As predicate acts serving as the basis for RICO liability, the Kuboshes alleged
that the Carter parties, Sullo, and Sullo & Sullo engaged in mail fraud and wire fraud.
The Kuboshes alleged:
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By sending and receiving courthouse correspondence and service
copies of court filings in the U.S. mail, and by using the U.S. mail to
communicate with one another in furtherance of their RICO scheme of
fraudulently misrepresenting Sullo’s efforts to barratrously orchestrate
a Fraud on the Court to make money under the guise of conducting
“price checks” of the Kubosh Brothers, each of the Carter Plaintiffs and
Third-Party Defendants Sullo and [Sullo & Sullo] have engaged in mail
fraud in violation of 18 U.S.C. § 1341.
By repeatedly using the telephone and by tying up the Kubosh Bonding
and Kubosh Law telephone lines to fraudulently misrepresent
themselves as ordinary consumers of bail bonding and/or legal services,
while concealing such facts as Sullo’s presence, Instructions, and
interest in carrying out his . . . vendetta against the Kubosh Brothers,
each of the Carter Plaintiffs and Third-Party Defendants Sullo and
[Sullo & Sullo] have engaged in one or more acts of wire fraud in
violation of 18 U.S.C. § 1343.
The Kuboshes alleged that each “fraudulent ‘price check’” call by the Carter parties
“constituted a separate, independent act of wire fraud that together comprise a
pattern of racketeering activity.”
In April 2015, the judicial panel on multidistrict litigation transferred Nash’s
and Youngblood’s suits—both filed in Jefferson County—to the Harris County
district court where Carter’s suit was pending for resolution of pretrial matters. See
TEX. GOV’T CODE ANN. § 74.162 (providing for transfer of “civil actions involving
one or more common questions of fact pending in the same or different constitutional
courts, county courts at law, probate courts, or district courts to any district court for
consolidated or coordinated pretrial proceedings, including summary judgment or
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other dispositive motions, but not for trial on the merits”). All three suits currently
remain pending in the Harris County district court.
Although in the years this litigation has been pending the Carter parties have
filed amended petitions in this case, adding factual details, the only cause of action
they have asserted against the Kuboshes is a claim for violation of the civil barratry
statute.
On April 6, 2016, the Kuboshes filed their fifth amended counterpetition and
fourth amended third-party petition. In this petition, the Kuboshes alleged:
The precise involvement of Zimmerman and [Joe] Fisher in planning
and executing the calls is not yet completely known, but we do know
from the Carter Plaintiffs’ Amended Privilege Log that [Andrew] Sullo
and Zimmerman were in email communication as early as January 27,
2012 “concerning status of barratry litigation”—a little over two
months following the first and most significant spate of calls made from
Sullo’s office to the Kubosh Defendants. . . . Sullo and Zimmerman
began communicating “concerning the status of barratry litigation”
almost nine months before Youngblood and Nash made and recorded
their calls.
....
[T]he Sullo Plaintiffs’ privilege log provided to the Kubosh
Defendants . . . shows the first discussions to set up this conference
room [at Provost Umphrey] were between Andrew Sullo and Brian
Zimmerman on July 28, 2012, nearly two months before Mr.
Youngblood’s call to Kubosh Bail. There can be no reason at all for a
discussion to reserve the conference room between the lawyer, Andrew
Sullo, who entered into a contract with these Plaintiffs to make a phone
call in exchange for a share in the resulting lawsuit, and one future
counsel of record, Brian Zimmerman, at the offices of another future
counsel of record, Joe Fisher, to which Sullo would have to drive 90
miles to record the call, except to further their criminal
enterprise. . . . That is, the wrongfully-withheld e-mails show that the
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Provost Umphrey conference room was for nearly three months the
center of Sullo’s enterprise to target the Kubosh Defendants by
launching the first of a pattern of Sullo-orchestrated, Sullo-scripted, and
Sullo-recorded sham “Price Match” calls to the Kubosh Defendants.
In addition to the claims asserted in their earlier counterpetition, the Kuboshes added
causes of action for violating a federal wiretap statute and Texas’s Interception of
Communications Act arising out of the recording of the Carter parties’ calls to the
Kuboshes.
The Kuboshes also added a party to this suit: Gregory Sullo.1 The Kuboshes
“sued G. Sullo in both his individual capacity and as an attorney in and managing
partner of [Sullo & Sullo] who foisted this fraud upon the courts of Texas and on the
Kubosh Defendants in his supervisory and representative capacity at [Sullo &
Sullo].” The Kuboshes alleged that Gregory Sullo was “possibly” present and
involved when the Carter parties made their calls to the Kuboshes, and thus
committed wire fraud, a predicate act under RICO. The Kuboshes also alleged that
Andrew Sullo, Gregory Sullo, and Sullo & Sullo committed the predicate act of
obstruction of justice “[b]y formulating a fraudulent scheme using the Sullo fake-
plaintiffs fraudulent ‘price check’ Instructions, actively participating in the
1
In this petition, the Kuboshes also asserted individual claims against Edward James
Carney, whose son, Edward Buckley Carney, was one of the Carter parties and who
had died prior to the start of litigation. The Kuboshes asserted that, during the
pendency of the case, Edward James Carney had fraudulently signed documents on
his son’s behalf without disclosing that he was acting in a representative capacity
for his son’s estate.
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commission of a fraud on this Court, presenting perjurious explanations for his
fraudulent ‘price check’ Instructions and cookie-cutter affidavits, and destroying
material parts of the ‘price check’ record within their sole possession.”
Gregory Sullo was not served with this petition naming him as a third-party
defendant until November 29, 2017, more than eighteen months after the Kuboshes
filed this petition.
E. The Kuboshes’ Petition for Mandamus Relief
In May 2016, shortly after they filed their fifth amended counterpetition and
fourth amended third-party petition, the Kuboshes sought mandamus relief in this
Court relating to the trial court’s decision not to compel the Carter parties to disclose
unredacted copies of a series of emails between Andrew Sullo, Brian Zimmerman,
and a paralegal at Provost Umphrey, ranging from July through early October 2012,
concerning the reservation of a conference room at the offices of Provost Umphrey
in Beaumont so Youngblood and Nash could make their calls to the Kuboshes. The
Kuboshes argued that withholding these emails was an improper offensive use of the
work product privilege, and a panel of this Court agreed. See In re Kubosh Bail
Bonding, 522 S.W.3d 75 (Tex. App.—Houston [1st Dist.] 2017, orig. proceeding).
This Court reversed the trial court’s order denying the Kuboshes’ motion to compel
and required the Carter parties to disclose the unredacted emails.
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F. The Kuboshes’ Amended Counterclaims and Third-Party Claims
On December 19, 2017, the Kuboshes filed their sixth amended
counterpetition and fifth amended third-party petition, raising the same claims as in
their previous petition, but adding claims against Brian Zimmerman. They alleged:
Andrew Sullo framed the “price match” questions to make the Sullo
Plaintiffs [the Carter parties] appear as making good faith business
inquiries and to disguise Sullo’s and Zimmerman’s role in orchestrating
the calls. Sullo, Zimmerman, Greg Sullo, Sullo & Sullo (collectively,
the “Sullo Parties”) and the Sullo Plaintiffs conspired to execute a
criminal enterprise and pre-planned Fraud on the Court and the
Kuboshes.
They further alleged that “[a] key part of the Sullo Plaintiffs’ and Sullo Parties’
conspiracy and criminal enterprise is to hide behind Texas discovery and evidentiary
rules to deliberately obfuscate discovery of the operative facts underlying the
lawsuits.”
With respect to their RICO claims, the Kuboshes alleged:
All and each of the Sullo Plaintiffs, the Sullo Parties [including Gregory
Sullo and Zimmerman] and Edwards James Carney, and their counsel
of record, along with numerous persons who called the Kubosh
Defendants under A. Sullo’s “price match” instructions but chose not
to become plaintiffs in this lawsuit, formed a RICO association-in-fact
enterprise with common and continuing purposes, namely, to serve as
a flexible vehicle to set up and file these in terrorem lawsuits based
upon created facts for the express purpose of forcing a settlement,
obtaining judgment, and causing the Kubosh Defendants to incur
enormous legal fees and to destroy or degrade the Sullo Parties’
competitors Michael Kubosh and Paul Kubosh by embroiling them in
legally meritless but expensive and time-consuming “civil barratry”
litigation. [Sullo & Sullo] and Zimmerman Axelrad are also
racketeering enterprises used for these same objectives.
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They alleged that the emails that were the subject of the prior mandamus proceeding
in this Court constituted RICO predicate acts of wire fraud, as Andrew Sullo and
Zimmerman used these emails “to procure ‘a Beaumont Plaintiff’ with the stated
purpose to create fraudulent lawsuits, fraudulently establish venue [in Jefferson
County] and fraudulently file and maintain the lawsuits.”
The Kuboshes further alleged:
The Sullo Plaintiffs’ lawsuits themselves are the goal of and central to
the RICO enterprise actively and continuously supported and furthered
by the Sullo Plaintiffs, the Sullo Parties and Edward James Carney. In
addition to the Sullo Plaintiffs’ lawsuits being the goal and ultimate
mechanism of the racketeering activities of the RICO enterprise, the
Sullo Parties have extended their racketeering activities to fraudulently
claim privileges under the Texas rules in order to conceal their actions,
offensively employing these privileges as part and parcel of their Fraud
on the Court, including Brian Zimmerman filing a sworn declaration
that directly contradicts representations as officer of the court of his co-
counsel Joe Fisher in apparent perjury and obstruction of justice to
maintain the veil of secrecy of his and A. Sullo’s participation in the
underlying facts of the case and the operative facts themselves.
They alleged that the Sullo Parties—Andrew and Gregory Sullo, Sullo & Sullo, and
Brian Zimmerman—used the United States mail as part of their criminal enterprise,
including Zimmerman’s actions in mailing pleadings and discovery responses and
in sending and receiving correspondence to and from the trial court. The Kuboshes
also alleged that the Sullo Parties improperly used the trust account held by
Zimmerman’s law firm, Zimmerman Axelrad, in connection with posting cash bonds
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for Youngblood and Nash on their warrants to deliberately conceal Andrew Sullo’s
involvement with the case.
In this petition, the Kuboshes asserted their claims for injunctive and
declaratory relief, common-law fraud, civil conspiracy, their RICO claims, and
violations of federal and Texas wiretapping statutes against all of the “Sullo Parties,”
which was defined in their pleadings to include Gregory Sullo and Brian
Zimmerman.
G. Proceedings Under the Texas Citizens’ Participation Act
On January 26, 2018, Zimmerman moved to dismiss all of the claims against
him pursuant to the TCPA. Zimmerman argued that the Kuboshes’ claims against
him were based on, related to, or filed in response to his right to petition, his right of
free speech, and his right of association, and, thus, the TCPA applied to the
Kuboshes’ claims. Specifically, Zimmerman argued that all of the claims against
him targeted his actions as counsel for the Carter parties, implicating his right to
petition as defined by the TCPA. Zimmerman challenged the Kuboshes’ ability to
present clear and specific evidence establishing a prima facie case on each element
of each cause of action asserted against him. Zimmerman also argued that, even if
the Kuboshes could establish a prima facie case, he could establish two defenses to
their claims—the attorney-immunity doctrine, which precluded an attorney’s
liability to nonclients for actions taken within the scope of representing a client, and
19
the applicable statute of limitations—which required the trial court to dismiss the
claims against him.
Gregory Sullo also moved for dismissal of all of the claims against him
pursuant to the TCPA on January 26, 2018. His motion to dismiss largely mirrored
Zimmerman’s, although he pointed out that the Kuboshes had alleged no specific
actions taken by him, instead “merely lump[ing him] in with allegations against the
‘Sullo Parties.’” He argued that no evidence supported any of the Kuboshes’ claims
against him, contending that his “association with the law firm of Sullo & Sullo and
Andrew Sullo alone cannot create a cognizable claim.” He asserted that, even if the
Kuboshes could establish a prima facie case against him on each of their claims, he
could establish that their claims were barred by the statute of limitations, entitling
him to dismissal under the TCPA. Both Zimmerman’s and Gregory Sullo’s TCPA
motions to dismiss addressed all of the Kuboshes’ causes of action asserted against
them: common-law fraud, civil conspiracy, RICO violations, conspiracy to violate
RICO, and violations of state and federal wiretapping laws.
On March 29, 2018, the Kuboshes responded to Gregory Sullo’s and
Zimmerman’s motions to dismiss. In addition to arguing that their claims against
Sullo and Zimmerman did not implicate any of the statutory rights protected under
the TCPA, they also argued that their claims were not subject to the TCPA because
20
the claims fall within the TCPA’s exemption for “commercial speech.” The
Kuboshes also stated:
Zimmerman and Greg Sullo have also moved to dismiss claims of
wiretapping and common law fraud, which the Kuboshes do not allege
against Zimmerman and Greg Sullo. The wiretapping claims are against
Andrew Sullo and the Sullo Plaintiffs [the Carter parties], who made
and recorded the calls for use for tortious and criminal purposes.
The Kuboshes therefore, in arguing against Sullo’s and Zimmerman’s TCPA
motions, defended only their claims for RICO violations and for conspiracy to
violate RICO.2
With respect to Gregory Sullo, the Kuboshes argued that his “active
participation in this conspiracy to barratrously recruit and fund Kubosh-suing
plaintiffs is clear,” noting that the Carter parties’ amended privilege log references
numerous emails sent to Sullo or that he was copied on, “underscor[ing] that Sullo
& Sullo was being used as a RICO enterprise—that it was not just Andrew Sullo
working in his section, but that he deployed the full resources of his firm.” The
2
At the hearing before the trial court on the TCPA motions, the Kuboshes’ counsel
stated: “[T]he only claims we have against them [Zimmerman and Gregory Sullo]
are the RICO claims and the conspiracy to commit RICO claims. We never brought
the—the—the wiretapping claims. They were not abandoned as a result of this
motion. They were never brought in the first place. They are—actually, they’re
rereading the petition to create claims that don’t exist for purposes of attacking it by
their motion. All we have brought against Greg Sullo and Brian Zimmerman are the
RICO and conspiracy to commit RICO.”
21
Kuboshes also argued that neither Zimmerman nor Sullo established an affirmative
defense to the RICO claims asserted against them.
In addition to responding to Sullo’s and Zimmerman’s TCPA motions, the
Kuboshes moved to dismiss the Carter parties’ civil barratry claims against them
pursuant to the TCPA. The Kuboshes filed their TCPA motion on March 29, 2018,
nearly five years after Youngblood filed the first barratry suit against them. In their
motion, the Kuboshes argued that “[t]he underlying speech involved in each Plaintiff
call to the Kuboshes, and the Kuboshes’ response to their inquiries, involves a
‘matter of public concern’ under the TCPA definition as an issue related to ‘a good,
product, or service in the marketplace.’” They further argued that the Carter parties
could not establish a prima facie case on each element of their civil barratry claims,
asserting that they engaged in no prohibited conduct when the Carter parties called
and that the Carter parties could not prove that they were solicited by the Kuboshes.
The Kuboshes further argued that good cause existed to permit the late-filing
of their motion to dismiss:
The Kuboshes have good cause for the late filing of the motion in that
any reasonable interpretation of TCPA would inform that it is not
available in this case because of the commercial speech exception of
the TCPA. If the exception is not found to apply in the cases of
Zimmerman’s and Greg Sullo’s motions to dismiss, it should not apply
to the Sullo Plaintiffs’ claims against the Kuboshes and the court should
hear all the motions to dismiss.
Good cause further exists because Zimmerman’s and Greg Sullo’s
motions to dismiss would permit these issues to be determined solely
22
from a one-sided perspective and would be inconsistent with the
purposes and intent of the TCPA. Filing by Greg Sullo and Brian
Zimmerman at this stage of the proceedings compels examination by
the Court of all the underlying TCPA issues, and not just those in
connection with Brian Zimmerman’s and Greg Sullo’s motions to
dismiss.
After holding a hearing, the trial court denied all three TCPA motions to
dismiss. The trial court did not state its rationale in the order denying the motions.
This interlocutory appeal followed. See TEX. CIV. PRAC. & REM. CODE ANN.
§ 27.008(b) (providing that appellate court shall expedite appeal from trial court
order on motion to dismiss legal action under TCPA).
THE TCPA MOTIONS TO DISMISS
The trial court denied Sullo’s, Zimmerman’s, and the Kuboshes’ TCPA
motions to dismiss. Each party argues that the trial court erred by making these
rulings.
A. Standard of Review and Governing Law
The TCPA “protects citizens who [associate,] petition or speak on matters of
public concern from retaliatory lawsuits that seek to intimidate or silence them.”3
3
The Texas Legislature amended the TCPA in its most recent legislative session. The
amendments are effective September 1, 2019. Because this suit was filed before the
effective date of the amendments, it is governed by the statute as it existed before
the amendments, and all of our citations and analysis are to the TCPA as it existed
prior to September 1, 2019. See Act of May 17, 2019, 86th Leg., R.S., ch. 378, §§ 1–
12, secs. 27.001, 27.003, 27.005, 27.006, 27.009, 27.010, 2019 Tex. Sess. Law Serv.
684, 684–87 (to be codified at TEX. CIV. PRAC. & REM. CODE ANN. §§ 27.001–
.011).
23
Youngkin v. Hines, 546 S.W.3d 675, 679 (Tex. 2018) (quoting In re Lipsky, 460
S.W.3d 579, 584 (Tex. 2015)); see TEX. CIV. PRAC. & REM. CODE ANN. § 27.002
(“The purpose of [the TCPA] is to encourage and safeguard the constitutional rights
of persons to petition, speak freely, associate freely, and otherwise participate in
government to the maximum extent permitted by law and, at the same time, protect
the rights of a person to file meritorious lawsuits for demonstrable injury.”); D
Magazine Partners, L.P. v. Rosenthal, 529 S.W.3d 429, 433–34 (Tex. 2017)
(recognizing that TCPA is designed to balance these dual policies). The TCPA “shall
be construed liberally to effectuate its purpose and intent fully.” ExxonMobil
Pipeline Co. v. Coleman, 512 S.W.3d 895, 898 (Tex. 2017) (per curiam) (quoting
TEX. CIV. PRAC. & REM. CODE ANN. § 27.011(b)).
“To effectuate the statute’s purpose, the Legislature has provided a two-step
procedure to expedite the dismissal of claims brought to intimidate or to silence a
defendant’s exercise of these First Amendment rights.” Id. (citing TEX. CIV. PRAC.
& REM. CODE ANN. § 27.003); In re Lipsky, 460 S.W.3d at 586. For a legal action to
be brought “to intimidate or to silence a defendant’s exercise of . . . First
Amendment rights,” see ExxonMobil, 512 S.W.3d at 898, and in retaliation for a
defendant’s exercise of those constitutional rights, the action must be “based on,
relate[] to, or is in response to a party’s exercise of the right of free speech, right to
24
petition, or right of association.” See TEX. CIV. PRAC. & REM. CODE ANN.
§ 27.003(a). That party may then file a motion to dismiss the legal action. Id.
A TCPA motion to dismiss must be filed not later than the 60th day after the
date of service of the legal action, but the trial court may extend the time to file a
motion to dismiss on a showing of good cause. Id. § 27.003(b); see id. § 27.001(6)
(defining “legal action” as “a lawsuit, cause of action, petition, complaint, cross-
claim, or counterclaim or any other judicial pleading or filing that requests legal or
equitable relief”).
To obtain dismissal under the TCPA, the moving party must establish, as a
threshold matter, that the TCPA properly applies to the legal action against it.
Youngkin, 546 S.W.3d at 679. Hence, the first step in analyzing a motion to dismiss
under the TCPA requires “determining whether the defendant established that the
plaintiffs’ suit was in response to the defendant’s having exercised [his or] her
constitutional right to free speech, petition, or association.” S & S Emergency
Training Sols., Inc. v. Elliott, 564 S.W.3d 843, 846 (Tex. 2018); Youngkin, 546
S.W.3d at 680; see TEX. CIV. PRAC. & REM. CODE ANN. § 27.005(b).
The TCPA statutorily defines “exercise of the right of free speech,” “exercise
of the right to petition,” and “exercise of the right of association.” The TCPA defines
“exercise of the right of association” as “a communication between individuals who
join together to collectively express, promote, pursue, or defend common interests.”
25
TEX. CIV. PRAC. & REM. CODE ANN. § 27.001(2). The “exercise of the right of free
speech” is defined as “a communication made in connection with a matter of public
concern,” and a “matter of public concern” is statutorily-defined to include an issue
related to (1) health or safety; (2) environmental, economic, or community well-
being; (3) the government; (4) a public official or public figure; or (5) a good,
product, or service in the marketplace. Id. § 27.001(3), (7); Adams v. Starside
Custom Builders, LLC, 547 S.W.3d 890, 892 (Tex. 2018) (noting that TCPA’s
definition of “exercise of the right of free speech” is “not fully coextensive with”
right of free speech protected in United States and Texas Constitutions in that, under
TCPA, communication must be “made in connection with a matter of public
concern”). The “exercise of the right to petition” is statutorily defined to include, in
relevant part, “a communication in or pertaining to . . . a judicial proceeding,” and
“a communication in connection with an issue under consideration or review by” a
judicial body. TEX. CIV. PRAC. & REM. CODE ANN. § 27.001(4)(A)(i), (B).
“Communication” itself is defined to include “the making or submitting of a
statement or document in any form or medium, including oral, visual, written,
audiovisual, or electronic.” Id. § 27.001(1); Adams, 547 S.W.3d at 894 (stating that
“[a]lmost every imaginable form of communication, in any medium, is covered”
under TCPA).
26
The TCPA expressly states that it does not apply to four different types of
legal actions, including an action “brought against a person primarily engaged in the
business of selling or leasing goods or services, if the statement or conduct arises
out of the sale or lease of goods, services, . . . or a commercial transaction in which
the intended audience is an actual or potential buyer or customer.” TEX. CIV. PRAC.
& REM. CODE ANN. § 27.010(b). The party asserting that a claim is exempt from the
TCPA bears the burden of establishing the applicability of the exemption to its suit.
Deaver v. Desai, 483 S.W.3d 668, 673 (Tex. App.—Houston [14th Dist.] 2015, no
pet.).
In determining whether to dismiss a legal action under the TCPA, the court
shall consider the “pleadings and supporting and opposing affidavits stating the facts
on which the liability or defense is based.” TEX. CIV. PRAC. & REM. CODE ANN.
§ 27.006(a); Adams, 547 S.W.3d at 897 (“[T]he unique language of the TCPA
directs courts to decide its applicability based on a holistic review of the pleadings.”).
If the TCPA movant meets its initial burden to establish the applicability of
the TCPA, the burden shifts to the nonmoving party, the party bringing the legal
action, to establish by clear and specific evidence a prima facie case for each
essential element of the claim in question. Youngkin, 546 S.W.3d at 679; see TEX.
CIV. PRAC. & REM. CODE ANN. § 27.005(c). The TCPA does not define “clear and
specific evidence,” but the Texas Supreme Court has held that “clear” means
27
“‘unambiguous,’ ‘sure,’ or ‘free from doubt’” and “specific” means “‘explicit’ or
‘relating to a particular named thing.’” S & S Emergency Training Sols., 564 S.W.3d
at 847 (quoting In re Lipsky, 460 S.W.3d at 590). A “prima facie case,” as used in
the TCPA, means evidence that is legally sufficient to establish a claim as factually
true if that evidence is not countered, that is, “the minimum quantum of evidence
necessary to support a rational inference that the allegation of fact is true.” Id.
(quoting In re Lipsky, 460 S.W.3d at 590); see In re Lipsky, 460 S.W.3d at 590–91
(stating that TCPA requires more than mere notice pleading; instead, “a plaintiff
must provide enough detail to show the factual basis for its claim”).
If the party bringing the legal action establishes a prima facie case on each
element of its claim, the burden shifts back to the moving party to establish by a
preponderance of the evidence each essential element of a valid defense to the
nonmovant’s claim. Youngkin, 546 S.W.3d at 679–80; see TEX. CIV. PRAC. & REM.
CODE ANN. § 27.005(d); ExxonMobil, 512 S.W.3d at 899 (stating that even if
plaintiff establishes prima facie case, court will dismiss underlying action if TCPA
movant can establish each element of valid defense by preponderance of evidence).
If the court orders dismissal of a legal action under the TCPA, the court shall
award to the moving party (1) court costs, reasonable attorney’s fees, and other
expenses incurred in defending against the action “as justice and equity may require”
and (2) sanctions against the party bringing the underlying legal action “as the court
28
determines sufficient to deter the party who brought the legal action from bringing
similar actions described in [the TCPA].” TEX. CIV. PRAC. & REM. CODE ANN.
§ 27.009(a); D Magazine Partners, 529 S.W.3d at 442 (holding that, upon dismissal
of claims under TCPA, defendant “was therefore entitled to an award of reasonable
attorney’s fees”).
We review a trial court’s ruling on a TCPA motion to dismiss de novo. Porter-
Garcia v. Travis Law Firm, P.C., 564 S.W.3d 75, 83 (Tex. App.—Houston [1st
Dist.] 2018, pet. denied). We consider the pleadings and the evidence in a light
favorable to the nonmovant. Id. at 84; Dolcefino v. Cypress Creek EMS, 540 S.W.3d
194, 199 (Tex. App.—Houston [1st Dist.] 2017, no pet.).
B. Gregory Sullo’s and Zimmerman’s TCPA Motions to Dismiss the
Kuboshes’ Claims Against Them4
1. The Kuboshes’ RICO Claims
In their amended counterpetition and third-party petition, the Kuboshes sued
Gregory Sullo and Zimmerman for allegedly “barratrously solicit[ing], fili[ing], and
maintain[ing] the [Carter parties’] frivolous lawsuits to reap underserved economic
benefits where their perceived pecuniary gain was a significant motivation for the
filing and maintenance of these lawsuits” in violation of the Texas criminal barratry
4
Sullo and Zimmerman moved to dismiss all of the claims against them pursuant to
the TCPA. In their response, the Kuboshes addressed only their RICO claims and
asserted that they had not brought any other claims against Sullo and Zimmerman.
29
statute, Penal Code section 38.12, Texas Rule of Disciplinary Procedure 7.03, and
the RICO mail and wire fraud statutes.
The Kuboshes alleged that Gregory Sullo and Zimmerman, in addition to
Andrew Sullo and the Carter parties, “conspired to engage in and then did engage in
mail fraud, wire fraud, violation of federal wiretap law, and perjury that furthered
the RICO Enterprise’s unlawful purposes, as set forth above.”
Specifically, the Kuboshes alleged:
• “All and each of the Sullo Plaintiffs [and] the Sullo Parties
[defined to include Gregory Sullo and Zimmerman] . . . formed
a RICO association-in-fact enterprise with common and
continuing purposes, namely, to serve as a flexible vehicle to set
up and file these in terrorem lawsuits based upon created facts
for the express purpose of forcing a settlement, obtaining
judgment, and causing the Kubosh Defendants to incur enormous
legal fees and to destroy or degrade the Sullo Parties’ competitors
Michael Kubosh and Paul Kubosh by embroiling them in legally
meritless but expensive and time-consuming ‘civil barratry’
litigation.”
• “Predicate acts of wire fraud are set out in detail in the very
Emails between A. Sullo and Brian Zimmerman who used the
emails to procure ‘a Beaumont Plaintiff’ with the stated purpose
to create fraudulent lawsuits, fraudulently establish venue and
fraudulently file and maintain the lawsuits.”
• “In addition to the Sullo Plaintiffs’ lawsuits being the goal and
ultimate mechanism of the racketeering activities of the RICO
enterprise, the Sullo Parties have extended their racketeering
activities to fraudulently claim privileges under the Texas rules
in order to conceal their actions, offensively employing these
privileges as part and parcel of their Fraud on the Court,
including Brian Zimmerman filing a sworn declaration that
directly contradicts representations as officer of the court of his
30
co-counsel Joe Fisher in apparent perjury and obstruction of
justice to maintain the veil of secrecy of his and A. Sullo’s
participation in the underlying facts of the case and the operative
facts themselves.”
• “A. Sullo’s and Brian Zimmerman’s testimony and filings in this
case have been tailored to address whatever inquiry into the facts
they seek to obstruct or substantive ruling they seek to foreclose.
Their actions have been taken with no legitimate purpose and
only to conceal the truth and to increase the burden and expense
to the Kubosh Defendants by making the defense of the lawsuits
so prohibitively expensive as to force a settlement, and to obtain
judgment on fraudulent premises.”
• “These patently frivolous positions and offensive use of work
product and attorney-client privilege are racketeering activities
of their criminal enterprise, as recognized by the First Court of
Appeals [referring to this Court’s prior decision in In re Kubosh
Bail Bonding], and are targeted to make the litigation
prohibitively expensive, prevent the discovery of the truth, force
settlement and obtain a judgment.”
• “The Sullo Parties’ . . . racketeering enterprise affects interstate
commerce because it uses the instrumentalities of interstate
commerce to tie up at least three Texas civil courts in two
different counties.”
• “[T]he Sullo Parties . . . have used the U.S. mail, an
instrumentality of interstate commerce, as part of their RICO
enterprise, including Zimmerman’s certified mailing of Fraud on
the Court pleadings and discovery responses in Carter,
Youngblood and Nash as instances of using the U.S. Postal
Service.”
• “[T]he Sullo Parties used accounts at banks to screen A. Sullo’s
participation in the underlying lawsuits, specifically use of
Zimmerman Axelrad’s trust account to conceal that A. Sullo was
actually counsel for Youngblood and Nash for their traffic
warrant cases and that Zimmerman was actively conspiring to
conceal the truth regarding their barratrous orchestration of all of
the Sullo Plaintiffs’ claims.”
31
• “[T]he Sullo Parties used e-mail, an instrumentality of interstate
commerce, to the Kubosh Defendants and emails between the
Sullo Parties, specifically including the Emails between A. Sullo
and Brian Zimmerman to procure a ‘Beaumont Plaintiff’ to
fraudulently anchor venue in Beaumont for the Youngblood and
Nash cases.”
• “By sending and receiving courthouse correspondence and
service copies of court filings in the U.S. mail, and by using the
U.S. mail to communicate with one another in furtherance of
their RICO scheme of fraudulently misrepresenting the Sullo
Parties’ efforts to barratrously orchestrate a Fraud on the Court
to make money under the guise of conducting ‘price checks’ of
the Kubosh Defendants, each of the Sullo Plaintiffs, the Sullo
Parties and Edward James Carney have engaged in mail
fraud . . . .”
• “Brian Zimmerman’s actions in setting up the conference room
at Provost Umphrey for A. Sullo to procure Beaumont Plaintiffs
Youngblood and Nash’s fake ‘price match’ calls were followed
up by his handling of the cash bonds to conceal A. Sullo’s
participation and Brian Zimmerman’s orchestration of these
claims and manufacturing of the case facts with A. Sullo and
attorneys in his own firm. The ongoing litigation, as found by the
First Court of Appeals, is part of the continuing racketeering
activity, and use of the mails and electronic systems employed
by the courts are fundamental in carrying them out.”
• “By formulating a fraudulent scheme using the Sullo fake-
plaintiffs fraudulent ‘price check’ instructions, actively
participating in the commission of a fraud on this Court,
presenting perjurious explanations for his fraudulent ‘price
check’ instructions and cookie-cutter affidavits, and destroying
material parts of the ‘price check’ record within their sole
possession, Third-Party Defendants A. Sullo, G. Sullo, [and]
Brian Zimmerman . . . have engaged in obstruction of
justice . . . .”
In their response to Sullo’s TCPA motion to dismiss, the Kuboshes argued:
32
Greg Sullo’s active participation in this conspiracy to barratrously
recruit and fund Kubosh-suing plaintiffs is clear. He is a co-owner of
Sullo & Sullo, the firm that was operated as a criminal enterprise to turn
their clients into plaintiffs in a critical mass of manufactured claims.
Greg Sullo is copied on many pieces of email correspondence, as early
as February 28, 2012 and including several where both Greg Sullo and
Ms. Shivers [an attorney at Zimmerman Axelrad, and who posted the
bond for Youngblood and Nash] were copied, on November 1 and 11,
2013 and again on December 16, 2013. In addition, the amended
privilege log references emails to which Greg Sullo is a party. Greg
Sullo’s involvement underscores that Sullo & Sullo was being used as
a RICO enterprise—that it was not just Andrew Sullo working in his
section, but that he deployed the full resources of his firm.
The Kuboshes also argued that “abundant evidence” exists to support an
inference that Sullo agreed to commit two more racketeering acts,
including Greg Sullo’s partnership in the criminal enterprise of Sullo &
Sullo and the evidence of his involvement in the planning and execution
by his presence on the supposedly work product privileged emails to
which he was a party. Greg Sullo was also part of the so-called “legal
strategy” to barratrously solicit clients to sue the Kuboshes.
With respect to Zimmerman, it is undisputed that the majority of the Carter
parties’ phone calls to the Kuboshes occurred in September and October 2011, with
the parties immediately signing attorney-client representation agreements with
Andrew Sullo. It is also undisputed that Andrew Sullo first contacted Zimmerman
about the cases in January 2012 and that Zimmerman accepted referral of the cases
in May or June 2012 and undertook their representation.
With respect to the basis of their RICO claims, the Kuboshes alleged that
Zimmerman, along with others, “formed a RICO association-in-fact enterprise with
33
common and continuing purposes, namely, to serve as a flexible vehicle to set up
and file these in terrorem [civil barratry] lawsuits based upon created facts.” The
Kuboshes alleged that Zimmerman committed a RICO predicate act of wire fraud
by exchanging emails with Andrew Sullo beginning in July 2012 “to procure ‘a
Beaumont Plaintiff’ with the stated purpose to create fraudulent lawsuits,
fraudulently establish venue and fraudulently file and maintain the lawsuits.”
2. Sullo and Zimmerman’s Initial Burden as TCPA Movants to Show
the Applicability of the TCPA to the Kuboshes’ RICO Claims Against
Them
In moving to dismiss the Kuboshes’ RICO claims against them under the
TCPA, Sullo and Zimmerman bore the initial burden of showing by a preponderance
of the evidence that the TCPA applies to the claims asserted against them and that
no exemption from TCPA coverage applies. In this case, they were required to show
that the conduct for which they were sued were “communication[s] made in
connection with a matter of public concern,” which, in the context of this case,
necessarily means communications related to a “service in the marketplace”—here
the provision of legal services by Sullo and Zimmerman—and that those
communications were protected. See TEX. CIV. PRAC. & REM. CODE ANN.
§ 27.001(3), (7); Adams, 547 S.W.3d at 892.
a. Whether the Kuboshes’ suit against Sullo and Zimmerman is
brought in relation to a matter of public concern
34
Both the barratry claims that the Sullo firm and Zimmerman have brought and
maintained against the Kuboshes on behalf of the Carter parties and the RICO claims
that the Kuboshes have brought against Sullo and Zimmerman for filing and
maintaining the Carter parties’ barratry suits against the Kuboshes arise out of a
matter of public concern—the allegedly barratrous sale of legal services. See TEX.
CIV. PRAC. & REM. CODE ANN. § 27.001(3), (7); cf. DeAngelis v. Protective Parents
Coalition, 556 S.W.3d 836, 852 (Tex. App.—Fort Worth 2018, no pet.) (“[P]ublic
or private communications related to the provision of legal services to the public by
licensed attorneys . . . are recognized as matters of ‘public concern’ implicating the
exercise of free speech under the TCPA.”); Deaver, 483 S.W.3d at 673–74 (holding
that statements that attorney is prejudiced and will lie to win case relate to attorney’s
legal services, which are offered in marketplace, and thus statements address matters
of public concern). Accordingly, this Court must determine in this TCPA suit
whether Sullo and Zimmerman have shown by a preponderance of the evidence that
the actions for which the Kuboshes have sued them are constitutionally protected
communications in relation to their provision of legal services to their clients and
are not, as the Kuboshes allege, actions that are not constitutionally protected but
are, instead, actionable in themselves as communications prohibited by law.
We note as a threshold matter that the violations of the criminal barratry
statute, Penal Code section 38.12, alleged by the Kuboshes as RICO predicate acts
35
against the defendants, including Sullo and Zimmerman, in the underlying suit are
not the same as the violations of the civil barratry claims brought against the
Kuboshes by the Carter parties under sections (c), (d), and (e) of the then-newly-
enacted Texas civil barratry statute, Government Code section 82.0651. Under the
plain language of section 82.0651, each of the civil barratry actions brought by the
Carter parties against the Kuboshes could only have been brought by a person
“solicited by conduct [of the Kuboshes] violating Section 38.12(a) or (b), Penal
Code, or Rule 7.03 of the Texas Disciplinary Rules of Professional Conduct.” See
TEX. GOV’T CODE ANN. § 82.0651(c). And, in addition, these civil barratry claims
could have been brought and maintained on behalf of the Carter parties by the Sullo
firm and Zimmerman only if the Carter parties did not subsequently “enter into a
contract [with the alleged offender, the Kuboshes] as a result of [the Kuboshes’]
conduct” in improperly soliciting their business. Id. The Carter parties did not enter
into contracts with the Kuboshes for legal or bail bond services. Therefore, the civil
barratry statute applies to the Kuboshes’ allegedly barratrous actions.
Conversely, the Kuboshes’ RICO claim against Sullo and Zimmerman is
based on Sullo and Zimmerman and the other defendants’ actions in allegedly
manufacturing the barratry claims brought by the Carter parties against the Kuboshes
after soliciting the Carter parties to create them, and then representing the Carter
parties in pursuing those claims in the solicited litigation. These actions are all
36
represented by the Kuboshes as acts of criminal barratry in violation of Penal Code
section 38.12(a) and (b) and, because of the use of phones and other electronic
communications in soliciting and maintaining allegedly barratrous litigation, as
RICO predicate acts.
b. Whether the TCPA movants have shown that their actions,
represented by the Kuboshes as RICO predicate acts, are
protected communications
In their amended counterpetition and third-party petition, the Kuboshes
accuse Sullo, Zimmerman, and the other defendants of violating Penal Code section
38.12, the criminal barratry statute, which prohibits offering “to pay [or] give . . . to
a prospective client money or anything of value to obtain employment as a
professional from the prospective client” and “knowingly accept[ing] employment
within the scope of the person’s license, registration, or certification that results from
the solicitation of employment in violation of Subsection (a)” of section 38.12. See
TEX. PENAL CODE ANN. § 38.12(a)(3), (b)(3). Specifically, the Kuboshes allege that,
through Andrew Sullo’s price match program, the defendants offered to give the
Carter parties something of value—an interest in recovering damages from the
Kuboshes in a civil lawsuit—in order to obtain employment by the Carter parties.
The Kuboshes contend that both the TCPA movants’ solicitation of the Carter
parties as prospective clients and their representation of them in barratry litigation
against the Kuboshes by use of the telephone and electronic communications are not
37
constitutionally protected acts of free speech and of the right to petition, but are
instead illegal acts of mail fraud and wire fraud in violation of both the Texas Penal
Code and RICO, and, thus, are RICO predicate acts that are not protected by the
TCPA. To carry their initial burden in their TCPA motion, therefore, Sullo and
Zimmerman were required to show by a preponderance of the evidence that they
were sued solely for actions taken within “the scope of their representation of” the
Carter parties and not for conduct outside the scope of that legal representation or
for “conduct foreign to the duties of a lawyer,” namely barratrous activities of their
own. See Youngkin, 546 S.W.3d at 681.
Zimmerman argues in support of his TCPA motion that all of the alleged
actions that form the basis of the Kuboshes’ RICO claims against him were taken in
his capacity as counsel for the Carter parties and are, therefore, within the scope of
his representation of his clients and are constitutionally protected acts to which the
TCPA applies. See Youngkin, 546 S.W.3d at 681 (setting out affirmative defense of
attorney immunity); Cantey Hanger, LLP v. Byrd, 467 S.W.3d 477, 481 (Tex. 2015)
(same); Alpert v. Crain, Caton & James, P.C., 178 S.W.3d 398, 406 (Tex. App.—
Houston [1st Dist.] 2005, pet. denied) (“[A]n attorney’s conduct, even if frivolous
or without merit, is not independently actionable if the conduct is part of the
discharge of the lawyer’s duties in representing his or her client.”). Zimmerman
claims that, even though the Kuboshes repeatedly label as “wrongful” and
38
“fraudulent” his alleged actions that serve as the basis for the Kuboshes’ RICO
claims against him—consulting with referring counsel, filing pleadings and
discovery responses, asserting privileges, and using trust accounts to post bonds for
clients—these acts are “the kind of conduct in which an attorney engages when
discharging his duties to his client.” See Cantey Hanger, 467 S.W.3d at 482; see also
Youngkin, 546 S.W.3d at 681 (noting that focus of inquiry is “on the kind of conduct
at issue rather than the alleged wrongfulness of said conduct”).
Zimmerman also argues that his conduct in sending the emails relating to
securing the Provost Umphrey conference room for Youngblood and Nash to make
their calls to the Kuboshes is protected by attorney immunity even though these
actions occurred before any of the Carter parties filed suit and thus occurred outside
the litigation context. See Troice v. Greenberg Traurig, L.L.P., 921 F.3d 501, 505–
06 (5th Cir. 2019) (examining case law from Texas intermediate appellate courts
applying doctrine of attorney immunity outside of litigation context, concluding that
this application comports with purpose of doctrine to “promote loyal, faithful, and
aggressive representation” in comprehensive manner, and holding that Texas
Supreme Court would apply attorney immunity doctrine to conduct occurring in
non-litigation context).
In their TCPA motion in response to the Kuboshes’ RICO suit against them,
Sullo and Zimmerman allege that Zimmerman’s filing of the barratry lawsuits
39
against the Kuboshes on behalf of the Carter parties, his filing of amended petitions
and discovery responses, his assertion of privilege, and his communications with
Andrew Sullo and Gregory Sullo concerning the maintenance and status of the
barratry lawsuits—actions central to the Kuboshes’ RICO claims, as indicated in the
Kuboshes’ pleadings—are all actions that they took in connection with the Carter
parties’ lawsuits against the Kuboshes and are therefore acts of free speech,
association, and the right to petition that are protected by the TCPA. See Hawxhurst
v. Austin’s Boat Tours, 550 S.W.3d 220, 227 (Tex. App.—Austin 2018, no pet.)
(holding that “broad definition” of “communication” under TCPA “encompasses a
petition in a lawsuit, which is a ‘judicial proceeding’”).
In support of their TCPA motion to dismiss the Kuboshes’ claims against
them, Sullo and Zimmerman observe that Texas Supreme Court has held that the
TCPA “applies to a legal action against a party that is based on, related to, or in
response to the party’s making or submitting of a statement or document in or
pertaining to a judicial proceeding.” See Youngkin, 546 S.W.3d at 680; see also
Hersh v. Tatum, 526 S.W.3d 462, 467 (Tex. 2017) (“The basis of a legal action is
not determined by the defendant’s admissions or denials but by the plaintiff’s
allegations. . . . When it is clear from the plaintiff’s pleadings that the action is
covered by the [TCPA], the defendant need show no more.”).
40
Sullo and Zimmerman further point out that an attorney is immune from
liability to nonclients for conduct within the scope of his representation of his clients.
Youngkin, 546 S.W.3d at 681; Cantey Hanger, 467 S.W.3d at 481 (stating that
defense of attorney immunity stems from “the broad declaration over a century ago
that ‘attorneys are authorized to practice their profession, to advise their clients and
interpose any defense or supposed defense, without making themselves liable for
damages’”) (quoting Kruegel v. Murphy, 126 S.W. 343, 345 (Tex. App.—Dallas
1910, writ ref’d)). Furthermore, they argue, the Texas Supreme Court has held:
Put differently, an attorney may be liable to nonclients only for conduct
outside the scope of his representation of his client or for conduct
foreign to the duties of a lawyer. We also clarified in Cantey Hanger
that the above inquiry correctly focuses on the kind of conduct at issue
rather than the alleged wrongfulness of said conduct. That is, a lawyer
is no more susceptible to liability for a given action merely because it
is alleged to be fraudulent or otherwise wrongful.
Youngkin, 546 S.W.3d at 681; see Cantey Hanger, 467 S.W.3d at 481 (“Even
conduct that is ‘wrongful in the context of the underlying suit’ is not actionable if it
is ‘part of the discharge of the lawyer’s duties in representing his or her client.’”)
(quoting Toles v. Toles, 113 S.W.3d 899, 910–11 (Tex. App.—Dallas 2003, no
pet.)). They also argue that labeling an attorney’s conduct as fraudulent “does not
and should not remove it from the scope of client representation or render it ‘foreign
to the duties of an attorney.’” Cantey Hanger, 467 S.W.3d at 483 (quoting Alpert,
178 S.W.3d at 406). The attorney-immunity defense “exists to promote ‘loyal,
41
faithful, and aggressive representation’ by attorneys, which it achieves, essentially,
by removing the fear of personal liability.” Youngkin, 546 S.W.3d at 682 (quoting
Cantey Hanger, 467 S.W.3d at 481).
Sullo and Zimmerman thus argue that they have demonstrated by a
preponderance of the evidence that the TCPA applies to the RICO claims asserted
against them. See TEX. CIV. PRAC. & REM. CODE ANN. § 27.003(a) (providing that
party may move to dismiss legal action against him if legal action is “based on,
relates to, or is in response to a party’s exercise of the right of free speech, right to
petition, or right of association”); Youngkin, 546 S.W.3d at 680–81 (holding that
TCPA applied to nonclient’s claims against attorney because attorney’s alleged
liability “stem[med] from his dictation of the Rule 11 agreement into the court record
during trial,” attorney’s statement was made in judicial proceeding, and claim thus
implicated attorney’s right to petition); James v. Calkins, 446 S.W.3d 135, 147–48
(Tex. App.—Houston [1st Dist.] 2014, pet. denied) (holding that TCPA applied to
plaintiff’s fraud and barratry claims against defendant and her attorneys because
claims were based on defendant and attorneys’ assertion that they represented ward
in pleadings filed in lawsuits and plaintiff’s fraudulent lien claim was based on lis
pendens defendant had filed in another proceeding); see also River Plantation Cmty.
Improvement Ass’n v. River Plantation Props., LLC, No. 09-17-00451-CV, 2018
WL 4120252, at *4 (Tex. App.—Beaumont Aug. 30, 2018, no pet.) (mem. op.)
42
(“The TCPA creates a safeguard to protect individuals who are in litigation from
retaliation based on the individual’s filing of a petition with a court.”).
We conclude that Sullo and Zimmerman have failed to bear their burden of
showing by a preponderance of the evidence that the communications for which they
were sued were lawful acts of legal representation protected by the First Amendment
as opposed to unlawful acts of criminal barratry, mail fraud, and wire fraud.
Moreover, as we discuss below, we conclude that the Kuboshes have established a
prima facie case on each essential element of their RICO claims against these
defendants and that Sullo and Zimmerman have failed to establish each essential
element of a valid defense to the Kuboshes’ RICO claims against them. See TEX.
CIV. PRAC. & REM. CODE ANN. § 27.005(c), (d) (providing that if TCPA movant
meets its initial burden to establish applicability of TCPA, burden shifts to
nonmoving party—party bringing underlying legal action—to establish by clear and
specific evidence prima facie case against TCPA movant for each essential element
of claim in question and that, if nonmoving party does so, burden shifts back to
movant to establish each essential element of valid defense to nonmoving party’s
claims); Youngkin, 546 S.W.3d at 679–80.
3. The Kuboshes’ Burden as TCPA Non-Movants to Make a Prima
Facie Case Against Sullo and Zimmerman
To establish a prima facie case for their RICO claims against Sullo and
Zimmerman, the Kuboshes were required to produce evidence legally sufficient to
43
establish these claims as factually true if not countered; that is, they were required
to support their RICO claims with “the minimum quantum of evidence necessary to
support a rational inference that the allegation of fact is true.” S & S Emergency
Training Sols., 564 S.W.3d at 847 (quoting In re Lipsky, 460 S.W.3d at 590). If the
party bringing the underlying action establishes a prima facie case on each element
of its claim against the TCPA movant, the burden shifts back to the movant to
establish by a preponderance of the evidence each essential element of a valid
defense to the nonmovant’s claim. Youngkin, 546 S.W.3d at 679–80; see TEX. CIV.
PRAC. & REM. CODE ANN. § 27.005(d); ExxonMobil, 512 S.W.3d at 899.
The Kuboshes alleged that Sullo and Zimmerman violated the following
provision of RICO:
It shall be unlawful for any person employed by or associated with any
enterprise engaged in, or the activities of which affect, interstate or
foreign commerce, to conduct or participate, directly or indirectly, in
the conduct of such enterprise’s affairs through a pattern of racketeering
activity or collection of unlawful debt.
18 U.S.C. § 1962(c). The different subsections of section 1962 have three common
elements that a plaintiff must demonstrate to establish civil RICO liability: (1) a
person who engages in (2) a pattern of racketeering activity, (3) connected to the
acquisition, establishment, conduct, or control of an enterprise. Snow Ingredients,
Inc. v. SnoWizard, Inc., 833 F.3d 512, 523–24 (5th Cir. 2016); Abraham v. Singh,
480 F.3d 351, 355 (5th Cir. 2007). “A pattern of racketeering activity consists of two
44
or more predicate criminal acts that are (1) related and (2) amount to or pose a threat
of continued criminal activity.” Snow Ingredients, 833 F.3d at 524 (quoting St.
Germain v. Howard, 556 F.3d 261, 263 (5th Cir. 2009) (per curiam)); Abraham, 480
F.3d at 355. The predicate criminal acts can be violations of either state or federal
law. Snow Ingredients, 833 F.3d at 524. “An enterprise is a group of persons or
entities associating together for the common purpose of engaging in a course of
conduct.” Whelan v. Winchester Prod. Co., 319 F.3d 225, 229 (5th Cir. 2003).
The Kuboshes also alleged that Sullo and Zimmerman—along with Andrew
Sullo, Sullo & Sullo, and the Carter parties—conspired to violate section 1962(c).
RICO “criminalizes conspiracy to violate any of its substantive provisions.” United
States v. Delgado, 401 F.3d 290, 296 (5th Cir. 2005); see 18 U.S.C. § 1962(d) (“It
shall be unlawful for any person to conspire to violate any of the provisions of
subsection (a), (b), (c) of this section.”). To prove a RICO conspiracy, the plaintiff
must establish (1) that two or more people agreed to commit a substantive RICO
offense and (2) that the defendant knew of and agreed to the overall objective of the
RICO offense. Delgado, 401 F.3d at 296. Under section 1962(d), there is no
requirement that the conspirator “have committed or agreed to commit the two
predicate acts”; instead, the conspirator “need only have known of and agreed to the
overall objective of the RICO offense.” Id.45
Section 1961 defines “racketeering activity” and lists a number of criminal
offenses that can constitute racketeering activity, including mail fraud and wire
fraud. See 18 U.S.C. § 1961(1)(B). The United States Code defines mail fraud as
follows:
Whoever, having devised or intending to devise any scheme or artifice
to defraud, or for obtaining money or property by means of false or
fraudulent pretenses, representations, or promises, or to sell, dispose of,
loan, exchange, alter, give away, distribute, supply, or furnish or
procure for unlawful use any counterfeit or spurious coin, obligation,
security, or other article, or anything represented to be or intimated or
held out to be such counterfeit or spurious article, for the purpose of
executing such scheme or artifice or attempting so to do, places in any
post office or authorized depository for mail matter, any matter or thing
whatever to be sent or delivered by the Postal Service, or deposits or
causes to be deposited any matter or thing whatever to be sent or
delivered by any private or commercial interstate carrier, or takes or
receives therefrom, any such matter or thing, or knowingly causes to be
delivered by mail or such carrier according to the direction thereon, or
at the place at which it is directed to be delivered by the person to whom
it is addressed, any such matter or thing, shall be fined under this title
or imprisoned not more than 20 years, or both. . . .
Id. § 1341; United States v. Whitfield, 590 F.3d 325, 354 (5th Cir. 2009) (“The mail
fraud statute applies to anyone who ‘knowingly causes to be delivered by mail’
anything ‘for the purpose of executing’ ‘any scheme or artifice to defraud.’”)
(citation omitted). The United States Code defines wire fraud as follows:
Whoever, having devised or intending to devise any scheme or artifice
to defraud, or for obtaining money or property by means of false or
fraudulent pretenses, representations, or promises, transmits or causes
to be transmitted by means of wire, radio, or television communication
in interstate or foreign commerce, any writings, signs, signals, pictures,
46
or sounds for the purpose of executing such scheme or artifice, shall be
fined under this title or imprisoned not more than 20 years, or both.
18 U.S.C. § 1343; United States v. Stalnaker, 571 F.3d 428, 436 (5th Cir. 2009)
(“Wire fraud is a specific-intent crime requiring proof that the ‘defendant knew the
scheme involved false representations,’ which related to material information.”)
(quoting United States v. Nguyen, 504 F.3d 561, 568 (5th Cir. 2007)).
The Texas Supreme Court has consistently pointed out that while attorney
immunity is broad, “it is not limitless.” Youngkin, 546 S.W.3d at 682. Attorneys are
not “insulated from all liability to nonclients for all wrongdoing in the name of a
client.” Id. Specifically, attorneys are not shielded from liability to nonclients for
their actions when those actions “do not qualify as ‘the kind of conduct in which an
attorney engages when discharging his duties to his client.’” Cantey Hanger, 467
S.W.3d at 482.
The court has identified “several nonexhaustive examples of conduct that may
fall outside the reach of the attorney-immunity defense,” including the attorney’s
participating in a fraudulent business scheme with a client, knowingly assisting a
client with a fraudulent transfer to avoid paying a judgment, stealing of goods or
services on the client’s behalf, and assaulting opposing counsel during trial.
Youngkin, 546 S.W.3d at 682–83; Cantey Hanger, 467 S.W.3d at 482–83. Finally,
the supreme court has specified that while “[f]raud is not an exception to attorney-
immunity,” the attorney-immunity defense “does not extend to fraudulent conduct
47
that is outside the scope of an attorney’s legal representation of his client, just as it
does not extend to other wrongful conduct outside the scope of representation.”
Cantey Hanger, 467 S.W.3d at 484; see also Troice, 921 F.3d at 507 (“We conclude
that criminal conduct [by an attorney] does not automatically negate immunity, but
in the usual case it will be outside the scope of representation.”).
Thus, the focus of the inquiry into whether the attorney-immunity defense
applies is on “the type of conduct at issue and the existence of an attorney-client
relationship at the time.” Youngkin, 546 S.W.3d at 683; see also Troice, 921 F.3d at
506 (“When Texas courts address criminal behavior in the immunity
analysis . . . their framework remains whether that behavior was in the scope of
representation and not whether it was criminal.”).
Unlike those cases in which an attorney’s actions alleged to be within the
scope of the TCPA were held to be constitutionally protected activities, the
Kuboshes alleged that Sullo and Zimmerman either took actions outside the scope
of representation of their existing clients in furtherance of an illegal scheme “to
pay[], give[], or advance[] . . . to a prospective client money or [some]thing of value
to obtain employment as a professional from the prospective client” or “knowingly
accept[ed] employment within the scope of [their] license, registration, or
certification that result[ed] from the solicitation of employment in violation of [Penal
Code] Subsection [38.12](a).” See TEX. PENAL CODE ANN. § 38.12(a)(3), (b)(3).
48
The Kuboshes pleaded their claims against Sullo and Zimmerman clearly and
specifically and supported them by evidence of the actions taken, which they allege
were unlawful. See TEX. CIV. PRAC. & REM. CODE ANN. §§ 27.005(c) (setting out
prima facie case requirement), 27.006(a) (requiring court, in determining whether to
dismiss legal action under TCPA, to consider “pleadings and supporting and
opposing affidavits stating the facts on which the liability or defense is based”).
Specifically, the Kuboshes produced evidence showing that none of the Carter
parties’ suits were filed until after each individual plaintiff had agreed in writing to
participate in the price match program and to call Kubosh Bail Bonding expecting
that they would likely be transferred to the Kubosh Law Office. The record includes
evidence of the “Disclosure & Agreement” forms setting out the price match
program that each of the Carter parties signed before calling the Kuboshes,
instruction sheets informing the Carter parties what to ask during their calls, form
affidavits completed by each of the Carter parties after their calls, and attorney-client
agreements signed by each of the Carter parties and Andrew Sullo. The record also
includes evidence—in the form of emails—that Zimmerman was involved in setting
up the conference room in Beaumont where Youngblood and Nash called the
Kuboshes and evidence that Gregory Sullo participated in email exchanges
concerning the suits against the Kuboshes.
49
Thus, the Kuboshes pleaded that Sullo and Zimmerman committed violations
of law that clearly and specifically bring their actions within the scope of the criminal
barratry statute, Penal Code section 38.12, Rule 7.03 of the Disciplinary Rules of
Professional Conduct, and 18 U.S.C. sections 1341 and 1343, prohibiting mail and
wire fraud, predicate acts under RICO. See, e.g., Whitfield, 590 F.3d at 354 (“The
mail fraud statute applies to anyone who ‘knowingly causes to be delivered by mail’
anything ‘for the purpose of executing’ ‘any scheme or artifice to defraud.’”);
Stalnaker, 571 F.3d at 436 (“Wire fraud is a specific-intent crime requiring proof
that the ‘defendant knew the scheme involved false representations,’ which related
to material information.”) (citation omitted); see also Snow Ingredients, 833 F.3d at
523–24 (holding that necessary element of civil RICO claim is “pattern of
racketeering activity,” which consists of “two or more predicate criminal acts that
are (1) related and (2) amount to or pose a threat of continued criminal activity,” and
that predicate criminal acts can be violations of state or federal law). And they
supported their claims with evidence stating the facts on which their RICO claims
are based. See TEX. CIV. PRAC. & REM. CODE ANN. §§ 27.005(c), 27.006(a).
Accordingly, we hold that the Kuboshes established a prima facie case against
Sullo and Zimmerman by “clear and specific evidence,” satisfying their burden of
proof necessary to avoid dismissal under the TCPA. See S & S Emergency Training
Sols., 564 S.W.3d at 847; In re Lipsky, 460 S.W.3d at 590–91. That is, they
50
referenced evidence that is legally sufficient to establish their claims as factually true
if not countered. See S & S Emergency Training Sols., 564 S.W.3d at 847; In re
Lipsky, 460 S.W.3d at 590.
4. Sullo and Zimmerman’s Limitations Defense to the Kuboshes’ RICO
Claims
Because the Kuboshes established a prima facie case on each element of the
underlying RICO claims upon which Sullo and Zimmerman sought dismissal, the
burden shifted back to Sullo and Zimmerman to establish by a preponderance of the
evidence each essential element of a valid defense to the RICO claims. See TEX. CIV.
PRAC. & REM. CODE ANN. § 27.005(d); Youngkin, 546 S.W.3d at 679–80;
ExxonMobil, 512 S.W.3d at 899. We look to the “pleadings and supporting and
opposing affidavits stating the facts on which the . . . defense is based,” see TEX.
CIV. PRAC. & REM. CODE ANN. § 27.006(a), and we conduct “a holistic review of the
pleadings.” Adams, 547 S.W.3d at 897.
Here, Sullo and Zimmerman argue that the Kuboshes’ RICO claims against
them should be dismissed because the statute of limitations expired before the claims
were brought against them, providing a complete defense to those claims. The
Kuboshes respond that their evidence of Sullo’s and Zimmerman’s actions that form
the basis of the RICO claims against these defendants was obtained only after this
Court ordered the release of previously withheld emails on May 16, 2017.
51
A RICO plaintiff must bring his claims within four years of discovering the
harm. Rotella v. Wood, 528 U.S. 549, 553–54 (2000). Under the “injury discovery
rule,” the Fifth Circuit has held that “a civil RICO claim accrues when the plaintiff
discovers, or should have discovered, the injury.” Love v. Nat’l Med. Enters., 230
F.3d 765, 773 (5th Cir. 2000). The Fifth Circuit has also adopted the “separate
accrual rule,” which, when a pattern of RICO activity causes a continuing series of
separate injuries, allows a civil RICO claim to accrue for each injury when the
plaintiff discovers or should have discovered that injury. Id. at 773–75. And it has
expressly rejected the “fraud discovery rule,” under which a RICO cause of action
accrues when the plaintiff becomes aware of a fraud; it has held, instead, that a RICO
cause of action against a defendant does not accrue under the injury-discovery rule
until the plaintiff knows or should have known “that it suffered an injury caused by
that allegedly fraudulent conduct.” Id. at 777. Moreover, under the doctrine of
fraudulent concealment, the limitations period for a RICO claim is tolled until the
plaintiff discovers, or with reasonable diligence should have discovered, the
concealed fraud. Id. at 779 (quoting Klehr v. A.O. Smith Corp., 521 U.S. 179, 184
(1997)). All of these doctrines—the discovery rule, the accrual rule, and the
fraudulent concealment rule—apply in this case.
The Kuboshes contend that they did not realize until the filing of the Nash
petition in October 2014 that third-party defendant Andrew Sullo had concealed a
52
reserve of recordings to use against the Kuboshes in the Carter parties’ suit against
them and that only then did they realize the nature of the RICO injury they had
suffered. The emails show the nature of Zimmerman’s involvement, and the filing
of the Nash petition revealed that there were recordings of the phone calls that the
Kuboshes alleged constituted RICO predicate acts. The Kuboshes further argue that
only through the privilege log produced in this case did they discover that Gregory
Sullo was involved in the planning and execution of the “price match scheme,”
which the Kuboshes allege is unlawful under RICO. They contend that the third-
party defendants actively worked to conceal the facts pertinent to their RICO injury
and that they required court intervention to secure the evidence needed to establish
the allegedly unlawful scheme.
We conclude that Sullo and Zimmerman have failed to establish their
limitations defense by a preponderance of the evidence. Accordingly, we hold that
they are not entitled to dismissal of the Kuboshes’ RICO claims against them on
limitations grounds.
We hold that the Kuboshes’ suit under RICO is not subject to dismissal under
the TCPA. See TEX. CIV. PRAC. & REM. CODE ANN. §§ 27.003, 27.005; see also id.
§ 27.002 (“The purpose of [the TCPA] is to encourage and safeguard the
constitutional rights of persons to petition, speak freely, associate freely, and
otherwise participate in government to the maximum extent permitted by law and,
53
at the same time, protect the rights of a person to file meritorious lawsuits for
demonstrable injury.”). Therefore, the trial court did not err by denying Sullo’s and
Zimmerman’s motions to dismiss the Kuboshes’ RICO claims against them under
the TCPA.5
We overrule Sullo’s and Zimmerman’s first issue.6
5
The Kuboshes also argue that their RICO claims against Sullo and Zimmerman fall
within the commercial speech exemption and, therefore, the TCPA is not applicable
to their claims. The TCPA expressly provides that, even if the plaintiff’s claim is
based on, related to, or in response to the defendant’s exercise of his right of freedom
of speech, right to petition, or right of association, the Act does not apply to certain
situations. One of these situations to which the TCPA does not apply is a legal action
“brought against a person primarily engaged in the business of selling or leasing
goods or services, if the statement or conduct arises out of the sale or lease of goods,
services . . . or a commercial transaction in which the intended audience is an actual
or potential buyer or customer,” known as the commercial speech exemption. TEX.
CIV. PRAC. & REM. CODE ANN. § 27.010(b). We find it unnecessary to reach this
argument.
6
Sullo and Zimmerman also seek their attorney’s fees and costs pursuant to section
27.009(a) of the TCPA. Under the TCPA, if the court orders dismissal of a legal
action, the court shall award to the moving party (1) court costs, reasonable
attorney’s fees, and other expenses incurred in defending against the legal action as
justice and equity may require, and (2) sanctions against the party who brought the
legal action as the court determines sufficient to deter the party from bringing
similar actions described in the TCPA. TEX. CIV. PRAC. & REM. CODE ANN.
§ 27.009(a); Youngkin v. Hines, 546 S.W.3d 675, 683 (Tex. 2018); see Sullivan v.
Abraham, 488 S.W.3d 294, 299 (Tex. 2016) (holding that TCPA requires award of
“reasonable attorney’s fees” to successful movant and stating that “reasonable”
attorney’s fee is “one that is not excessive or extreme, but rather moderate or fair”).
Because we affirm the trial court’s order denying Sullo and Zimmermans’ motions
to dismiss the Kuboshes’ claims against them under the TCPA, we overrule their
issue seeking attorney’s fees and expenses as they are not a prevailing party on their
motions.
54
C. The Kuboshes’ Motion to Dismiss the Carter Parties’ Claims Against
Them
1. The Kuboshes’ First Amendment Claim Challenging the
Constitutionality of Government Code Section 82.0651
In the underlying litigation, the Kuboshes have asserted a First Amendment
claim challenging the constitutionality of Government Code section 82.0651 as
applied in the Carter parties’ suits.
Recognizing the public importance to the State of Texas of the construction
and application of the barratry laws, especially then-recently-enacted section
82.0651, as a matter of public concern, the State intervened as of right in this
litigation. It filed a brief in this appeal in which it states the following:
This litigation has been pending, in various forms and with various
parties, since 2013. But, crucially, the district court has not yet decided
the fundamental issue in the case: whether lawyer Paul Kubosh/Kubosh
Law Office and bail bondsman Felix Michael Kubosh/Kubosh Bonding
(the Kuboshes) violated the Texas civil barratry statute, TEX. GOV’T
CODE § 82.0651(c). Until the district court has made that
determination, there cannot and should not be a resolution of the
Kuboshes’ as-applied First Amendment challenge. . . . The Court
should decline the Kuboshes’ invitation to reach the constitutionality of
the Texas civil barratry statute.
(Emphasis added.)
We agree with the State’s observation that “the district court has not yet
decided the fundamental issue in the case”—whether the Kuboshes violated the civil
barratry statute, Government Code section 82.0651—and therefore that the
Kuboshes’ as-applied First Amendment challenge should not be resolved at this
55
time. We further observe that, as stated above, the district court has also not yet
decided whether the challenged actions of Sullo, Zimmerman, and the other
defendants in the Kuboshes’ RICO suit are lawful acts of representation of clients or
unlawful acts that violated the criminal barratry statute, section 38.12 of the Penal
Code. And from that observation we draw the reasonable inference that it is just as
premature for us to decide in this TCPA action whether the TCPA movants, Sullo
and Zimmerman, were exercising their First Amendment rights to practice the legal
profession in representing their clients in the barratry suits against the Kuboshes, or
were participating in an illegal scheme to enrich themselves by soliciting clients to
manufacture civil barratry claims for their own pecuniary gain and then representing
those persons as plaintiffs in their barratry suits against the Kuboshes.
2. Analysis of the Kuboshes’ TCPA Cross-Motion
We turn now to the merits of the Kuboshes’ cross-motion to dismiss the Carter
parties’ civil barratry claims against them pursuant to the TCPA. We first address
whether the Kuboshes’ TCPA motion was timely.
This Court has held that “[i]t is well-settled that the purpose of the TCPA is
‘to allow a defendant early in the lawsuit to dismiss claims that seek to inhibit a
defendant’s constitutional rights to petition, speak freely, associate freely, and
participate in government as permitted by law.’” Jordan v. Hall, 510 S.W.3d 194,
198 (Tex. App.—Houston [1st Dist.] 2016, no pet.) (quoting Paulsen v. Yarrell, 455
56
S.W.3d 192, 197 (Tex. App.—Houston [1st Dist.] 2014, no pet.)); see Miller
Weisbrod, L.L.P. v. Llamas-Soforo, 511 S.W.3d 181, 193 (Tex. App.—El Paso 2014,
no pet.) (stating that Legislature intended to effectuate purpose of TCPA “by
ensuring that courts will dismiss SLAPP suits quickly and without the need for
prolonged and costly proceedings”). Civil Practice and Remedies Code section
27.003 provides that a TCPA motion to dismiss must be filed “not later than the 60th
day after the date of service of the legal action.” TEX. CIV. PRAC. & REM. CODE ANN.
§ 27.003(b); Grant v. Pivot Tech. Sols., Ltd., 556 S.W.3d 865, 885 (Tex. App.—
Austin 2018, pet. denied); Bacharach v. Garcia, 485 S.W.3d 600, 602 (Tex. App.—
Houston [14th Dist.] 2016, no pet.). The TCPA defines “legal action” as “a lawsuit,
cause of action, petition, complaint, cross-claim, or counterclaim or any other
judicial pleading or filing that requests legal or equitable relief.” TEX. CIV. PRAC. &
REM. CODE ANN. § 27.001(6). The trial court may extend the time to file a motion
to dismiss “on a showing of good cause.”7 Id. § 27.003(b); Grant, 556 S.W.3d at
885; Jordan, 510 S.W.3d at 197.
7
The TCPA does not define “good cause.” In other contexts, including determining
whether good cause exists to allow the withdrawal of deemed admissions and to
allow the late-filing of a summary judgment response, the Texas Supreme Court has
held that good cause is “established by showing the failure involved was an accident
or mistake, not intentional or the result of conscious indifference.” See Wheeler v.
Green, 157 S.W.3d 439, 442 (Tex. 2005) (per curiam) (withdrawal of deemed
admissions); Carpenter v. Cimarron Hydrocarbons Corp., 98 S.W.3d 682, 688
(Tex. 2002) (late-filing of summary judgment response).
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Here, Youngblood originally filed suit against the Kuboshes for violation of
the civil barratry statute in Jefferson County on April 5, 2013. Carter filed suit
against the Kuboshes in Harris County on August 28, 2013, and Nash filed suit
against the Kuboshes in Jefferson County on October 1, 2014. Although the
plaintiffs have amended their petition several times during the course of this
litigation, the only cause of action they have ever asserted against the Kuboshes is a
claim for violation of the civil barratry statute. The Kuboshes did not file their TCPA
motion to dismiss the civil barratry claims against them until March 29, 2018, nearly
five years after Youngblood first filed suit.
The Kuboshes acknowledge that their TCPA motion to dismiss was not filed
within sixty days after the date of service of the legal action against, and, thus, that
their motion to dismiss was untimely. They argue, however, that “good cause” exists
for their late filing of the motion to dismiss and that the trial court erred by denying
their motion on this basis. Specifically, the Kuboshes argue that
It was only well after the deadline to file a TCPA motion to dismiss that
the true factual background emerged in this case, and that the
“commercial speech” exception could be seen not to apply, that
discovery revealed that the evidence showed that, in fact, the Sullo
Plaintiffs [e.g., Youngblood, Carter, Nash] were acting on behalf of
Andrew Sullo and could not be actual or potential customers of the
Kuboshes in connection with the communications at issue.
58
The Kuboshes contend that, due to the actions of Andrew Sullo and Zimmerman,
they were unable to determine the true nature of the case against them, justifying the
late filing of their TCPA motion. We disagree.
The record reflects that on October 21, 2014, approximately three weeks after
Nash filed the third and last suit against the Kuboshes, the Kuboshes filed their
second amended answer and counterpetition in the Carter suit. This pleading
contains the Kuboshes’ first allegations that the plaintiffs’ calls to their office were
made for an improper purpose. Specifically, the Kuboshes alleged:
[Andrew] Sullo orchestrated each and every Carter Plaintiff’s and
another 64 barratrously-solicited strangers’ calls from Sullo’s own
[Sullo & Sullo] office (as well as other locations) to Kubosh Bonding
using phone numbers Sullo provided each Carter Plaintiff, along with
pretextual “price match” scripts, and previously-prepared form
affidavit instructions listing Kubosh Law as the intended ultimate
recipient of each Sullo-instructed call.
Sullo masterminded an attorney-crafted scheme to perpetrate a Fraud
on the Court, defined in BLACK’S LAW DICTIONARY and case law as “a
lawyer’s or party’s misconduct so serious that it undermines or is
intended to undermine the integrity of the proceeding” such as “bribery
of a juror and introduction of fabricated evidence.” Sullo surreptitiously
recorded every Carter Plaintiff’s call. Sullo then filed this suit to
retaliate against the Kubosh Brothers . . . .
....
This case does not involve barratry by Kubosh Bonding or Kubosh Law
but, instead, a Fraud on the Court orchestrated by Sullo and [Sullo &
Sullo] using each Carter, Youngblood and Nash Plaintiff, 64 people
who called the Kubosh Brothers but remain “plaintiffs-in-waiting,”
aided and abetted by Zimmerman and Zimmerman Axelrad. This Court
59
should bring an end to the first phase of this lawsuit by dismissing, with
prejudice, the Carter Plaintiffs’ Fraud on the Court claims.
The Kuboshes then, in that same pleading, raised an as-applied challenge to the
constitutionality of the civil barratry statute and asserted claims against the Carter
parties, Andrew Sullo, and Sullo & Sullo, including claims for common-law fraud,
civil conspiracy, RICO violations, and conspiracy to violate RICO.
On January 22, 2016, in the Nash case, the Kuboshes filed a combined motion
to transfer venue, amended answer, original counterclaim against Nash, and original
third-party claims against Andrew Sullo, Gregory Sullo, and Sullo & Sullo, LLP.
The Kuboshes alleged that, as of that time, “[t]he precise involvement of
Zimmerman and Fisher in planning and executing the calls is not yet completely
known,” but due to a privilege log, the Kuboshes were aware that Andrew “Sullo
and Zimmerman were in email communication as early as January 27, 2012
‘concerning status of barratry litigation’—a little over two months following the first
and most significant spate of calls made from Sullo’s office to the Kubosh
Defendants.” The Kuboshes also alleged, “This scenario is overwhelming evidence
of obstruction of justice. . . . The [Carter parties] are relevant to this case only as a
tool for the criminal enterprise of Third-Party Defendants [Andrew Sullo, Gregory
Sullo, and Sullo & Sullo] and their confederates, Brian Zimmerman and Joe Fisher.”
The Kuboshes again challenged the constitutionality of the civil barratry statute and
asserted claims against the Carter parties, Andrew Sullo, Gregory Sullo, and Sullo
60
& Sullo, including claims for common-law fraud, civil conspiracy, RICO violations,
conspiracy to violate RICO, and violations of federal and state wiretapping statutes.
The Kuboshes alleged that the Carter parties and the “Sullo Parties” “formed a RICO
association-in-fact enterprise with common and continuing purposes, namely, to
serve as a flexible vehicle to set up and file these in terrorem lawsuits based upon
created facts . . . .”
The record also reflects that while the Carter parties and Andrew Sullo have
moved for summary judgment on the Kuboshes’ counterclaims—and received a
favorable summary judgment ruling on the Kuboshes’ common-law fraud claims—
the Kuboshes also moved for summary judgment on the Carter parties’ claims in
September 2015 and again in August 2017. The Kuboshes, however, did not seek
dismissal of the Carter parties’ claims against them under the TCPA until March
2018, nearly five years after the filing of Youngblood’s lawsuit. By the time the
Kuboshes moved for dismissal under the TCPA, they had been asserting that the
Carter parties’ lawsuits were a “fraud on the court” and should be dismissed due to
Andrew Sullo’s improper conduct “orchestrating” the cases since October 2014,
nearly three-and-a-half years before they filed their TCPA motion.
One of the overarching purposes of the TCPA is to provide an expedited
dismissal procedure for lawsuits that are based on, related to, or in response to the
exercise of certain statutorily-protected rights. See, e.g., In re Lipsky, 460 S.W.3d at
61
586 (“The Act provides a special procedure for the expedited dismissal of such suits
[that fall within the TCPA’s purview].”) (emphasis added); Jordan, 510 S.W.3d at
198 (noting that it is “well settled” that purpose of TCPA is to allow defendant “early
in the lawsuit” to seek dismissal of claims that implicate certain protected rights).
Allowing consideration of the Kuboshes’ TCPA motion in this case, filed years after
they were served with a legal action setting out the only causes of action that have
been asserted against them and filed after the Kuboshes have filed dispositive
summary judgment motions on those causes of action, would frustrate the purpose
of the TCPA and its expedited procedures. We conclude that the Kuboshes did not
establish good cause for the late filing of their TCPA motion to dismiss. We therefore
hold that the trial court did not err by denying the Kuboshes’ TCPA motion.8
8
The parties disagree regarding the appropriate standard of review for this issue. The
Kuboshes argue that we should review this question de novo, pointing out that
appellate courts review trial court rulings granting or denying TCPA motions to
dismiss, as well as questions of statutory construction of the TCPA, de novo. See
Porter-Garcia v. Travis Law Firm, P.C., 564 S.W.3d 75, 83 (Tex. App.—Houston
[1st Dist.] 2018, pet. denied). The Carter parties argue that we should review this
issue for an abuse of discretion, pointing out that section 27.003(b) provides that the
trial court “may extend the time to file a motion under this section on a showing of
good cause” and that, in other contexts, courts generally review determinations of
good cause for an abuse of discretion. See TEX. CIV. PRAC. & REM. CODE ANN.
§ 27.003(b) (emphasis added); see, e.g., Carpenter, 98 S.W.3d at 686 (reviewing
trial court’s ruling on motion for leave to file late summary judgment response for
abuse of discretion). We need not determine which standard of review is appropriate
for reviewing the question of whether a trial court properly determined that good
cause did or did not exist for the late filing of a TCPA motion because, under the
facts of this case, even under the less-deferential de novo standard of review, the
Kuboshes have not established that good cause existed for them to file their TCPA
motion nearly five years after the filing of the first suit asserted against them.
62
We overrule the Kuboshes’ sole issue, and we hold that the trial court did not
err in denying the Kuboshes’ motion to dismiss the Carter parties’ barratry suits
against them.
Conclusion
We affirm the trial court’s order denying Sullo’s, Zimmerman’s, and the
Kuboshes’ motions to dismiss under the TCPA.
Evelyn V. Keyes
Justice
Panel consists of Justices Keyes, Kelly, and Landau.
63